I can draw a circle around the idea that sticks out as being the problem child, the one that generates all the issues of stick and stumble and non direction the Lunars have. It's the Lunars having been mostly omitted from the Usurpation.

Think about it. None of the issues we struggle over about Lunars in the current setting would exist if they had been imprisoned alongside the Solars. No fifteen centuries of mostly doing nothing important, no self imposed exile. They're simply gone, and now they're back.

Don't get me wrong, I love the idea that the Lunars fled into self-imposed exile and failed their Solars, but the fact of them doing so is highly improbable; it doesn't match up with the heroes, survivors, and legends they were meant to be. It is somewhat antithetical to the Exalted. It's more realistic that they would have stayed and fought, or formed up in lines along the Bronze and Gold factions, falling into the overall scheme of things and thusly staying at the heart of Creation and therefore relevant. That they chose to flee instead is not such a problem; that they stayed gone for 1500 years is. By forcing these characters, who are defined by their inability to be penned up or hemmed in, who are defined by being second to the Solars, to remain non-factors, the writers have effectively said that Lunars don't matter.

A heaping load of inconsistencies have been tossed on top of them to support this, most going against the hypothesis of Exaltation, the biggest offenders being every idea that has served to make the Lunars look completely incompetent to do anything worthwhile in Creation for over a thousand years. That the developers could not serve them with the first Usurpation, or go on to logically acknowledge that they would force a second Usurpation-level event, or to craft them into the workings of present-day Creation as part of the big picture the way the Sidereals and Dragon-Blooded are, is the source of their seeming unnecessary.

You have a lot of conflicting ideas in the larger, prevailing themes of the Lunars:

1) That they are powerful, yet uninvolved
2) That they are powerful, yet unsuccessful at making major marks on Creation
3) That they are Luna's Chosen, yet incapable of consistently challenging any world empire
4) That they are fractured so badly they cannot form a cohesive alliance, as if the Solars and Sidereals were the duct tape that were holding their fragile souls together
5) That they could still be very important movers and shakers while stuck at the ass-edge of Creation fighting over scraps of land and scrabbling for import in a duty that is ill-defined and seems really unimportant in the scheme of things, and just as easily handled by the Dragon-Blooded. (In fact, the Empress's guns did more to keep the Raksha out than the Lunars ever did.)

I do not particularly support the idea that the Lunars should have imprisoned beside the Solars, but it would fix a lot of problems. Essentially saying that they’ve been gone all this time wouldn’t change anything, as they have failed to make any major mark. What it would do is remove the sense that the Lunars have been failures ever since the Solars were removed from the setting. The other alternative would be to recast the Lunars to take a meaningful place within Creation, so that they are inclined to move through it, work with it, and are performing moving-shaking actions commensurate with their Celestial Exaltation and their level of import as the former seconds of the Solar Exalted. There are any number of ways through which this could be done, none of which I will publicly espouse, but I can name a few: the Sidereals including Lunars in the Usurpation to create a large center of Lunar control in the present day is one (though I find it distasteful; I like the Dynasty being tops). Another scenario involves the Lunars taking sides in the Usurpation conflict. There could be Lunars doing the whole “support the Empire from the Shadows/influence world events from behind the scenes” thing right alongside the Sidereals, and permutations of that general vein of thinking that I’m sure nobody needs me to explain in detail. What I would actually do in full, I can’t say (nor would I say it), but essentially, you get the point. If you remove the Lunars fully, it solves the problem; if you integrate them correctly, it also solves the problem. Leaving them strung out in a limbo of unimportance for a great huge time mocks all of our abilities to conceive the Exalted for what they are and chafes against the hypothesis of the game.